Behind the Scenes: Operation targeting chicken producers creates crisis in Ankara

In an operation carried out last week, which included 13 of Turkey's leading chicken producers, 32 company managers were detained, and audit trustees were appointed to all the firms. However, the detentions ended shortly thereafter, and the decision to appoint trustees was also abandoned.

According to Erdal Sağlam's report, the developments following the operation raised tensions in Ankara. While the Ministry of Justice issued a message of support, other ministries stated they were unaware of the operation and shared information that they had conveyed the situation to AKP Chairman and President Recep Tayyip Erdoğan. The fact that a close relative of one of the company partners was also detained increased the gravity of the incident, particularly in political circles. Furthermore, high-level reactions were raised by industry representatives and non-governmental organizations.

Here is what Sağlam reported on the subject:

"ISO President Erdal Bahçıvan made harsh statements, and it was learned that the TOBB management, which did not show a reaction in public, conveyed the distress caused to the President. Besides this, it was observed that matters escalated when the brother of an AKP deputy, who is a partner of one of the producers, was also detained.

In the corridors, it is being discussed that the chicken company managers were released immediately following the reactions, the auditor trustees were withdrawn within a few days, and the Ministry of Justice was seriously warned by the President.

It is said that large chicken producers work with thousands of poultry-farming families in various regions of Anatolia, having them perform contract production, and therefore this operation victimized much wider segments than expected. It is stated that AKP executives, in particular, focused on this issue and opposed the operation, which they learned about after the fact."

"INDUSTRY IS BEING PUNISHED" REACTION

The entire private sector began to say that "production and industry are being punished" against this operation carried out on all these companies at once. However, it must also be said that the fact that this operation came on top of the major economic difficulties that private sector companies have been experiencing for some time has increased the reaction.

At the TÜSİAD High Advisory Council meeting, due to the effect of the judicial operation carried out last year, the focus was on the general global economy, economic difficulties were not touched upon much, and the latest operation was not mentioned at all. However, it is a fact that economic complaints, especially those coming from Anatolia, are gradually increasing. When we spoke with chamber presidents, we witnessed that financing difficulties, in particular, have grown significantly, causing companies to close, that the economic program implemented for 3 years has failed, and that they want concrete measures to be taken to revive production as soon as possible.

It is being discussed that in small provinces, attempts are being made to keep some local companies afloat through solidarity and by providing special aid, and that trouble has begun in payments. In fact, it is said that non-performing loans are higher than they appear, that banks are trying to keep the loans afloat, but that unless fresh blood arrives, the bad debts will increase.

For this reason, just like in the example of the restructuring of tax debts, talk has begun about the need for a legal regulation aimed at restructuring the bank loan debts of SMEs.

INTEREST RATE CUT MAY BEGIN

Especially while small and medium-sized companies are in a difficult situation, the Central Bank's strict limitation of banks' credit growth has drawn reaction. For this reason, it is stated that new loans cannot even be taken to pay off existing ones, and this tightness is being opposed.

Because complaints are increasing, it is requested that the volume of the 25 billion TL 'breath loan' (nefes kredisi) put into effect by TOBB be increased as soon as possible. It is stated that TOBB wants to increase the volume to 100 billion TL at once due to growing pressures, but the economic management wants the volume to be increased gradually over time with small increments on the grounds that it would "disrupt monetary balances." A decision on this matter is expected in the coming days.

With the effect of increasing pressures, the possibility of the Central Bank going for an interest rate cut in July has begun to be discussed. It is stated that the Central Bank may start pulling the funding interest rate, which is 40 percent, towards 37 through repo auctions starting next week. If this movement begins, the probability of the Central Bank making a cut in the 37 percent policy rate at the July meeting will increase. If there is no cut in July, since there is no meeting in August, it will be necessary to wait for September for an interest rate cut.

It is estimated that in the next few months, lower figures may emerge in inflation rates compared to last year, and small decreases may be experienced in annual inflation. However, we see that in the private sector, at best, the expectation of a 29-30 percent inflation rate for the year-end is being maintained.

Economic difficulties, with the effect of the global atmosphere, may enter a period of relief for a few months. However, we can say that this will not be enough and that the atmosphere will deteriorate again towards the end of the year. While complaints from every segment are growing, it is clear that much more radical steps are needed for a solution."